In terms of economic activity, the United Kingdom (UK), with its stark contrast between the prosperous South East and other less affluent areas, is one of the most unequal of the world’s developed states. For example, producing almost 22% of the UK’s total output, London acts as a strong centripetal force, challenging the position of northern England generally.
This imbalance impacts incomes, job creation, productivity and unemployment which, in turn, substantially affects community relations, educational outcomes, life expectancy and people’s wellbeing. The need for change and reform is now greater than ever.
Economic and political inequity
As detailed in the most recent State of the North report (Institute for Public Policy Research 2023), in northern England:
- Economic activity is consistently 3% lower than the rest of England
- Median pay is £1.60 less every hour
- Employment rate is consistently 3% to 4% behind
- Receipt of total public spending is almost £100 lower per person than the English average and £3,000 less than that in London
- Productivity is lagging with Greater Manchester at 88% of the average; West Yorkshire at 86%; Liverpool city region at 84%; Tyneside at 80%, and South Yorkshire at 77%
- Growth-enabling investment is also lacking. For example, if transport expenditure per person was equal to that in London between 2014 and 2020, an additional £51bn would have been invested.
Regretfully, long-term unemployment is markedly higher in northern England with lower skills and transport problems fanning the productivity gap. The effects of inflation on living standards impacts more greatly those on low and moderate incomes, exacerbating inequalities and accelerating in-work poverty. Some 20% of jobs are paid below the real wage and the housing stock in places such as the North East and the former industrial areas especially in need of some retrofitting to improve energy efficiency and quality.
Levelling up and the need for devolution
There is a clear connection between centralised governance from Westminster and Whitehall, and these imbalances. Enacting widespread, deeper devolution across England would effectively improve levelling up between the North and South, supported by sustained legislative commitments to reduce regional disparities in living standards, and underpinned by strong democratic mandates delivering within northern institutions.
Today, the UK’s levelling up fund is a four-year, time-bound, centralised pot of money worth £1.2bn annually to which local authorities expend their already stretched resources on competitive bids. The 2022 autumn statement by the UK government did not inflation-proof the levelling up fund or the shared prosperity fund, frustratingly leaving a £560mn shortfall to 2025/26.
Planned decreases to local government funding, over and above the 37% reduction experienced in the past decade, pose the shadow of council tax increases too. This would, unsatisfactorily, raise revenue inequitably across England according to property values, leading to deeper service cuts in less wealthy areas.
To compound the situation, statutory services use up much of the budget of many councils who hold public responsibilities without real decision-making power. Funds are so restricted that any discretionary provision designed to address regionally driven demands are under supported or impossible to deliver at all.
Empower local government in England
Westminster and Whitehall should now accept the imperative of empowering English local government. Through doing so the nation could capitalise on the benefits of improved regional growth, inclusion, and social outcomes in areas such as health, housing and education, to ensure effective use of public investment.
In support, a fair needs-based funding formula for local government should provide confidence over future funds, and the fiscal flexibility to address regional issues, especially if enhanced revenue-raising powers are devolved too, and stimulus for developing a more robust institutional capacity across northern England.
Such a model could successfully set out to tackle the North’s economy, transport needs, and wider inequalities including deprivation levels.
To quote from the State of the North report (IPPR, 2023):
“A recent commission for the Labour party on the future of the UK outlines a plan for devolution and central government reform… The offer includes further devolution of powers over transport, infrastructure, skills, development, and housing alongside replacing the House of Lords with an elected assembly of the nations and regions, a British Regional Investment Bank, and better cooperation between central government and devolved and local government across the UK. Reducing regional inequality and devolution is now a contested space.”
Elected regional assemblies
Indeed, many oppose the introduction of elected regional assemblies in England on the basis that the North East voted against the idea in 2004. Scotland and Wales did the same in 1979, but changed their minds by 1997. The North may be experiencing a similar context today, and structures for decentralising English democracy can take various forms.
These issues are now pressing, despite resistance to meaningful change in some quarters. The instinct to defer or delay constitutional development is deep. However, the risk of not addressing the underlying challenges is far greater than that presented by seeking to create conditions in which a new, stable, isles-wide partnership of modern regions and states could be introduced in the future. A possible way forward is explored in my recent article The Unfinished Business of UK Constitutional Reform published by the London School of Economics.
Constitutional reform is unfinished business in the UK and should now be advanced with purpose.
Glyndwr Cennydd Jones is an author and commentator on UK Constitutional issues and an advocate for a UK-wide Constitutional Conversation. His booklet A League-Union of the Isles is available here as an e-book and here as an easily printable pdf version.